Agriculture accounts for 18% of the world's total greenhouse gas (GHG) emissions, almost half of which are crop-related emissions. Reducing the carbon footprint of agriculture while ensuring global food security is a major challenge that requires the efforts of all stakeholders.

On March 23, 2023, Horizon CF and the Global Climate Initiative, Russia (CGI Russia) presented a new study "Reducing the carbon footprint in the production of mineral fertilizers", conducted with the active participation of PhosAgro, which provided data and practical cases. The presentation of the study was held in the format of a round table, the speakers at which were Yaroslav Gryaznov, Senior Executive Director of OOO Horizon CF – head of the group of authors of the study, Sergey Kudryashov, Head of the Sustainability Devision, PJSC PhosAgro; Vitaly Burmistrov, Climate Projects Manager, URALCHEM JSC; Tatyana Larionova, Deputy Head of the Department for Special Projects and Sustainable Development, JSC EuroChem Mineral and Chemical Company; Alexey Bogomolov, Partner Programs Development Director, Rosselkhozbank Asset Management. The discussion was also attended by representatives of Acron, Sovcombank, Remind, DRT, NRA, PRUE. G. V. Plekhanova, Bank of Russia and others. The discussion was moderated by Maria Novokreschenova, Deputy General Director of OOO Horizon CF, and Olga Ulyanova, Advisor to CGI Russia, independent member of the Board of Directors, Asakabank (Uzbekistan).

The fertilizer industry is committed to doing its part to reduce greenhouse gas (GHG) emissions and curb global warming. Some companies have already committed to achieving zero emissions, while others are just developing low-carbon development strategies. Efforts to reduce the carbon footprint are also being made in the fertilizer supply chain down to the farm level.

We analyzed all available technologies to reduce the carbon footprint that are used or considered by foreign and Russian producers of mineral fertilizers, as well as market trends. The study provides examples of both technologies and compensatory projects implemented by companies in Russia and abroad.

Yaroslav Gryaznov, Senior Executive Director of OOO Horizon CF

During the discussion of the study, such issues were raised as disclosure of non-financial reporting; features of Scope 1 and Scope 1, 2, 3; the impact of sanctions on the appetite of Russian companies for decarbonization; import substitution of low-carbon technologies; potential participation of Russian chemical companies in the circulation of carbon units; prospects for cheaper bank financing for green companies.

Our study showed that Russian mineral fertilizer producers successfully apply many technologies to reduce greenhouse gas emissions and often become examples of best practice. Systematization of relevant decarbonization mechanisms in the production of mineral fertilizers will help companies in the industry to implement high-quality new climate projects and develop effective sustainable development strategies.

Maria Novokreschenova, Deputy General Director of OOO Horizon CF

For our customers in a significant number of markets, it is important to manage greenhouse gas emissions from the use of mineral fertilizers. So we are on the one hand working to help our customers calculate these emissions, which for us are Scope 3, and on the other hand, we are producing special fertilizers with a delayed release of nutrients, which reduce nitrogen losses and greenhouse gas emissions.

Tatyana Larionova, Deputy Head of the Department for Special Projects and Sustainable Development of JSC EuroChem Mineral and Chemical Company

The TCFD recommendations, in which the Russian Federation also took part, will be integrated into International Financial Reporting (IFRS) this year. Thus they become part of the business standard all over the world. RSHB Asset Management conducted a joint study with the European University of St. Petersburg on the use of non-financial reporting of Russian companies, which resulted in the development of a family of Russian climate indices in order to curb the negative effects of global warming. However, in addition to reporting, Russia needs a government program to stimulate responsible investment. A new study by Horizon CF and CGI Russia has practical value for classifying companies in such an index, taking into account emissions per unit cost.

Alexey Bogomolov, Partner Programs Development Director of Rosselkhozbank Asset Management

The effectiveness of modern technologies for the production of agricultural products directly depends on the use of mineral fertilizers in them, therefore, the achievement of the sustainable development goals declared by the UN General Assembly “Eradicating hunger, ensuring food security and improving nutrition and promoting sustainable development of agriculture” and “Taking urgent action to combat climate change and its impacts” is not only interconnected, but also driven by the extent to which mineral fertilizer companies are able to implement technologies that reduce greenhouse gas emissions. PhosAgro has released fertilizers with improved climatic characteristics that prevent greenhouse gas emissions from the soil, i.e. on the side of our customers. This reduces the carbon footprint of the entire food value chain.

Sergey Kudryashov, Head of the Sustainability Devision of PJSC PhosAgro

Assessing and disclosing Scope 1 and 2 for companies that take a responsible position in the field of climate change has long become customary. There are some challenges associated with the Scope 3 assessment as it affects the entire supply chain and significant resources are required to be able to carry out this assessment. In addition, there are many approaches to calculating Scope 3 and each company can calculate it differently, which makes it difficult to compare data.

Vitaly Burmistrov, Climate Projects Manager of JSC URALCHEM

According to Tatyana Larionova, the toughening of the sanctions did not prevent EuroChem from launching a new unit for capturing CO₂ and producing liquid carbon dioxide with an investment of 1 billion rubles. Sergey Kudryashov noted that many of PhosAgro's long-term projects, including carbon landfills and energy efficiency improvements, have been successfully launched and continue to develop, although some projects have been put on hold due to limited access to technology. At the same time, this forces companies to look for new suppliers and new markets, which should eventually lead to the emergence of new links and coalitions in the production of mineral fertilizers.

Speaking about the problem of financing climate projects, Vitaly Burmistrov noted that there is a demand for such instruments, while supply in this segment lags behind, which indicates the need to develop the market.

Conducting independent research on climate issues contributes to the development of the market as a whole, as it gives both companies and regulators the opportunity to assess the progress made in this direction and identify bottlenecks that need new approaches and tools. We are grateful to our partners, in particular Horizon CF, for their efforts to advance the climate agenda and to all participants in this study for providing data and participating in the discussion.

Olga Ulyanova, Advisor to CGI Russia, independent member of the Board of Directors of Asakabank (Uzbekistan)

For additional information and full version of the study please email to esg@horizon.ru.